The whole thing seems very weak indeed, the way Picard handled things--and for the ONE time he actually acted with any sort of "strength" to be to fling a childish insult...it just makes it a million times worse.
As I said, the Cardassian treaty violation is not something I approve of. But I think it's quite likely Gul Macet DID want to keep the peace, that he wasn't faking. I would rather take to PM the real-life examples of why I say this, should you feel you need to see an example or two, but soldiers even in the US and other democratic nations' armies are not permitted to give their political opinions when acting in an official capacity (i.e. in uniform).
It is very interesting to note that the Treklit novels--while not canon and therefore not definitive for this discussion by any means--characterize Macet as having been genuine indeed in wanting to keep the peace, but stuck in the position of having to cover up the evidence of a really shitty, self-destructive policy of Central Command's of which he personally disapproved (because it was very, VERY counterproductive to the peace he and Picard wanted).
For me, it's Macet's total silence at Picard's revelation that lends a degree of credibility to this theory. Dukat, and any number of other Cardassians we have seen throughout the series would've had the audacity to continue lying right to Picard's face, after getting caught in a situation like that, or doing an elaborate on-the-spot spin job to justify themselves. Macet, on the other hand, does not dodge it. He cannot tell the truth because he would most certainly be tortured or killed at home, and possibly his family would wind up dead as well--and yet by his silence he does give acknowledgment. (It's an almost Garakian maneuver, though Macet's personality and Garak's are quite different.) Now, I can't prove anything, but I do think the fact that Macet acquiesces to the truth rather than doing what we see other Cardassians do is quite interesting and notable.